On the final day of consultation on climate reporting, the PRI wants to reinforce that the proposal from BEIS represents a worrying step backwards. 

The PRI CEO Fiona Reynolds said “she is surprised and concerned by the low ambition set forth by the UK’s Department for Business, Energy and Industrial Strategy (BEIS) in its consultation on climate-related corporate reporting. A step-change in the quality and quantity of corporate reporting is urgently needed by investors to provide decision-useful information on how companies are positioning themselves in the net-zero transition. The UK has long pioneered and promoted a new approach to climate-related financial disclosure. The proposal for consultation set forth by BEIS on corporate disclosure are out of step with other reforms on climate-related financial disclosures and critically - would water down, rather than implement, the TCFD framework.

In particular, the proposals would:

  1. Undermine the quality and comparability of UK corporate climate-related disclosures, diverging from what has become an established industry baseline by requiring corporate disclosure on the four pillars of the TCFD, rather than the actual 11 recommendations from the Taskforce.
  1. Exclude climate scenario analysis. A key innovation of the TCFD was to require both static and strategic disclosures, but removing the Taskforce’s recommendation that companies assess the strategic resilience of the business strategy to a range of climate scenarios, UK companies will no longer need to think forward on climate change.
  1. Lack information on company transition plans. For every financial decision to take into account climate change, investors, as illustrated by the Climate Action 100+ benchmark backed by over 540 investors with $52 trillion in assets, need UK companies to disclosure net-zero transition plans including the strategic alignment with the Paris Agreement objectives, including five, ten and 15 year targets GHG emission reduction targets (Scopes 1, 2 and most relevant scope 3 emissions), and capital expenditure plans and accounts aligned with these targets
  1. Lack consistency with other UK climate reporting regulation. The proposal for consultation are out of step with reporting requirements on pension funds, insurers, asset managers and banks put forward by the Department of Work and Pension and the Financial Conduct Authority. As such, investors will not only lack the information they need from companies, but also face higher compliance costs in completing their own TCFD reporting.

The UK COP 26 presidency has made climate-related reporting a priority for Glasgow. Yet, international leadership starts at home. Further observations on these corporate reporting proposals are available here. We ask BEIS to reconsider their plans for corporate climate reporting, incorporating the points above, and to maintain UK leadership in this area.